Human Capital, Fixed Capital Formation and Economic Growth: An Empirical Analysis of Endogenous Growth Drivers in Uganda
Keywords:
Gross National Income (GNI), Human Capital, Foreign Direct Investment (FDI), Inflation, Gross Capital Formation (GCF), Economic Growth
Abstract
This research aimed to look at the effect of key endogenous variables such as GNI, Human Capital, FDI, Inflation, and GCF, which have impacted the economic growth in Uganda. This study adopted a time-series research design. Data from the study were obtained through secondary sources, including government publications, international financial databases, and reports obtained from UBOS. The econometric methods the study adopted included the ADF test for stationarity, the VIF test for multicollinearity, and the ARDL model in testing both the short-run and long-run relationships. The study found that in the long run, human capital, GCF, and inflation significantly contributed to economic growth at favorable rates, while FDI negatively influenced economic growth. In the short run, GNI, Human Capital, FDI, and Capital are significant determinants of economic growth, with an adverse short-run effect for GNI and FDI. The results emphasize that capital formation and human capital development are important for sustainable economic growth in Uganda. The study concludes that different aspects of fashion affect Uganda's economic performance, indicating the need to stabilize major macroeconomic indicators to achieve long-term growth, focusing on human capital, capital formation, and managing inflation.
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References
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Barbra, N., & Nawaz, H. (2021). The Relationship Between Foreign Direct Investment-Oriented Economic Growth in Uganda: An Empirical Study Based on the VAR Model. Economics and Business Quarterly Reviews, 4(3).
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Christopher, T. (2022). The Impact of Foreign Direct Investment on Economic Growth in Uganda Case Study of Kampala District.
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Coscieme, L., Mortensen, L. F., Anderson, S., Ward, J., Donohue, I., & Sutton, P. C. (2020). Going beyond Gross Domestic Product as an indicator to bring coherence to the Sustainable Development Goals. Journal of Cleaner Production, 248, 119232.
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Díaz Rodríguez, H. E., & Aroche Reyes, F. (2020). Determinants of labour productivity in Mexico: an approach from the endogenous growth theory using artificial neural networks.
Dinh, D. (2020). Impulse response of inflation to economic growth dynamics: VAR model analysis. The Journal of Asian Finance, Economics and Business, 7(9), 10-13106.
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Kaivo-Oja, J., Vehmas, J., & Luukkanen, J. (2022). Economic Growth and Circular Economy in the European Union: Novel Empirical Synergy Analyses Between Key Variables of Circular Economy and Gross Domestic Product (GDP) and Gross National Income (GNI). OIDA International Journal of Sustainable Development, 15(05), 23-36.
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Khan, M., & Hanif, W. (2020). Institutional quality and the relationship between inflation and economic growth. Empirical Economics, 58, 627-649.
Kim, J. (2021). An analysis of Uganda's vocational education: Assessing human capital and human development approaches. Issues in Educational Research, 31(2), 556-573.
Kong, Y., Nketia, E. B., Antwi, S. K., & Musah, M. (2020). Scrutinizing the complex relationship between financial development, gross fixed capital formation and economic growth in Africa by adopting CCEMG and AMG estimation techniques. International Journal of Science and Business, 4(11), 160-174.
Kumar, D., & Nsubuga, J. (2023). ARDL bounds testing in macroeconomic time-series analysis. East African Journal of Economics.
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Mabrouki, M. (2023). Patent, education, human capital, and economic growth in Scandinavian countries: A dynamic panel CS-ARDL analysis. Journal of the Knowledge Economy, 14(3), 3028-3043.
Mahdi, A. E. S. A. A. (2023). Association among Omani Gross Capital Formation, Final Consumption Expenditure, Exports, and Imports. International Journal of Research and Scientific Innovation, 10(12), 53-63.
Mandeya, S. M. T., & Ho, S. Y. (2021). Inflation, inflation uncertainty and the economic growth nexus: An impact study of South Africa. Methods X, 8, 101501.
Mandeya, S. M., & Sin-Yu, H. (2022). Inflation, inflation uncertainty and the economic growth nexus: A review of the literature. Folia Oeconomica Stetinensia, 22(1), 172-190.
Maune, A., & Matanda, E. (2022). The nexus between gross capital formation and economic growth: Evidence from Zimbabwe. The Journal of Accounting and Management, 12(2).
Maune, A., Matanda, E., & Chitombo, E. (2023). Governance, Gross Capital Formation, Foreign Remittances and Economic Growth in Zimbabwe. Acta Universitatis Danubius. Œconomica, 19(3), 107-117.
Mohamed, N. A. (2023). Solow-Swan model for the analysis of the effect of foreign direct investments in Ugandan Economic Growth (Doctoral dissertation, Kampala International University, College of Economics and Management).
Nagawa, V., Wasswa, F., & Bbaale, E. (2020). Determinants of gross domestic savings in Uganda: an autoregressive distributed lag (ARDL) approach to cointegration. Journal of Economic Structures, 9, 1-19.
Ndregjoni, A., & Ndregjoni, A. (2024). The gross capital formation and human capital impact on economic growth in Albania.
Ngoc, B. H. (2020). The asymmetric effect of inflation on economic growth in Vietnam: Evidence by nonlinear ARDL approach. The Journal of Asian Finance, Economics and Business, 7(2), 143-149.
Nguyen, L. T. H. (2022). Impacts of foreign direct investment on economic growth in Vietnam. Journal of Economic and Banking Studies, 4, 01-15.
Nolan, B. (2020). The median versus inequality-adjusted GNI is a core indicator of ‘ordinary ’ household living standards in rich countries. Social Indicators Research, 150(2), 569-585.
Ntamwiza, J. M. V., & Masengesho, F. (2022). Impact of gross capital formation and foreign direct investment on economic growth in Rwanda (1990-2017). Current Urban Studies, 10(1), 1-13.
Nyamute, W., & Barasa, L. (2021). Effect of Gross Capital Formation on the Relationship between Debt Financing and Economic Growth among East African Community Member Countries. African Development Finance Journal, 5(1), 72-91.
Opeyemi, A. F. (2020). Impact of foreign direct investment and inflation on economic growth of five randomly selected Countries in Africa. Journal of Economics and International Finance, 12(2), 65-73.
Osei, M. J., & Kim, J. (2020). Foreign direct investment and economic growth: Is more financial development better?. Economic Modelling, 93, 154-161.
Oyegoke, E. O., & Aras, O. N. (2021). Impact of foreign direct investment on economic growth in Nigeria.
Ozigbu, J., Nchom, H., & Ezekwe, C. (2021). Rethinking the Economic Development Implications of Trinity Policy Trade-offs in Nigeria: A Focus on GNI Per Capita Growth. Asian Journal of Economics, Business and Accounting, 21(10), 57-66.
Parello, C. P. (2022). In Defence of the Endogenous Growth Theory:" Conditional" and" Unconditional" Convergence in Two-Country AK Models.
Pasara, M. T., & Garidzirai, R. (2020). Causality effects among gross capital formation, unemployment and economic growth in South Africa. Economies, 8(2), 26.
Pesaran, M. H., Shin, Y., & Smith, R. J. (2023). Testing for the existence of a long-run relationship. Applied Econometrics Journal.
Ping, J., Yashuai, L., & Susu, L. (2024). Exploring the Impacts of Technological Innovation on Industrial Structural Transformation: An Analysis Based on the Schumpeterian Endogenous Growth Theory. Contemporary Social Sciences, 9(6).
Prasetyo, P. E., & Kistanti, N. R. (2020). Human capital, institutional economics and entrepreneurship as a driver for quality & sustainable economic growth. Entrepreneurship and Sustainability Issues, 7(4), 2575.
Qamruzzaman, M. (2024). An assessment of the effect of gross capital formation and financial development on Renewable Energy Consumption in middle-income nations: Does FDI act as a boosting factor? Evidence from the CS-ARDl and NARDL framework. World Journal of Advanced Research and Reviews, 21(1), 1053-1071.
Qamruzzaman, M. (2024). Nexus between foreign direct investment, gross capital formation, financial development and renewable energy consumption: evidence from panel data estimation. GSC Advanced Research and Reviews, 18(1), 182-200.
Ramli, M., Boutayeba, F., & Nezai, A. (2022). Public investment in human capital and economic growth in Algeria: an empirical study using the ARDL approach. Journal of Social Sciences, (2), 7-17.
Rashid, S. (2023). Endogenous Growth in Historical Perspective: From Adam Smith to Paul Romer.
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Published
2025-04-26
How to Cite
Musiita, B., Kijjambu, F. N., & Nyiramahoro, R. (2025). Human Capital, Fixed Capital Formation and Economic Growth: An Empirical Analysis of Endogenous Growth Drivers in Uganda. Journal of Economics and Behavioral Studies, 17(1(J), 82-95. https://doi.org/10.22610/jebs.v17i1(J).4457
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Copyright (c) 2025 Benjamin Musiita, Frederick Nsambu Kijjambu, Ruth Nyiramahoro
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